Member of Executive Council (MEC) Mhlahlo to host a R107 million Black Economic Empowerment (BEE) deal signing ceremony for Transkei bus operations
22 February 2008
Eastern Cape MEC for Safety, Liaison, Roads and Transport, Mr Thobile Mhlahlo, will host a signing ceremony of a R107 million Black Economic Empowerment (BEE) deal between Africa's Best 350 Ltd and a consortium of financiers at the Regent Hotel in East London on 4 March 2008 at 10h00.
This deal is between Africa's Best 350 Ltd and the Department of Roads and Transport, which will spend R43 million and the rest of the money will come from a financing consortium, which comprises Eastern Cape Development Corporation (R2.5 million); Development Bank of Southern Africa (R10 million), National Empowerment Fund (R3.5 million); Industrial Development Corporation (R15.5 million) and Scania Finance (R32 million).
"We are collectively making visible and decisive intervention in the former Transkei region in an effort to provide a lasting solution to the public transport challenges that continue to haunt the rural communities of the region. This will be a major injection of quality public transport services into a poverty-stricken area by enhancing accessibility to economic opportunities through improved mobility," said MEC Mhlahlo.
The company's shareholding is 100% black, which makes Africa's Best 350 Limited (AB350) one of the biggest 100% black-owned bus companies in the country and the second biggest bus company in the Eastern Cape behind Algoa Bus Company operating in the Nelson Mandela Bay Metropolitan Municipality.
In the past, the department had contracts for the provision of subsidised bus passenger transport services in the Transkei with 148 small bus operators, who were using old buses and some were unroadworthy. However, the experience showed that it is virtually impossible to empower such a large number of bus operators individually, as the subsidy budget was not sustainable. It was also very difficult to administer such a large number of contracts by hand.
In view hereof, the Department suggested to the small bus operators that they should come together into a single legal entity as it would be much more efficient and sustainable for the following reasons:
* renewal of the fleet
* single manufacturer for their fleet of buses
* combined buying power will enable them to negotiate bulk supply discounts and rebates on the buses, tyres, fuel, lubricants, insurance etc
* economies of scale will improve dramatically
* uniform work systems and procedures
* continuous training within the corporate environment
* competing against other bus companies for future public transport contracts in an open tender system.
The department then assisted the operators through the appointment of a business consultant to advise them on the most appropriate institutional arrangement for the legal entity e.g. a co-operative, a company etc. The business consultant was also tasked with assisting the operators with the registration of the entity (registered as Africa's Best 350 Limited or AB350), negotiations with financiers, service providers and suppliers for the best deals for the company.
AB350 will eventually operate a fleet of 175 brand new buses on 166 routes in the Alfred Nzo, OR Tambo, Amathole and Chris Hani Districts. "This means more routes will be opened, which have not been operated in the recent past. It will further enhance the access of the communities to job opportunities, health and education centres," added MEC Mhlahlo.
These routes have been identified by the department through a comprehensive route viability study that was conducted.
The buses will be operated from seven depots in Mbizana, Lusikisiki, Mt Frere, Matatiele, Mthatha, Queenstown and Butterworth.
Scania and Volkswagen will supply the brand new buses and maintain them for the first five years of the seven-year contract while they are training AB350 technicians to maintain their own buses. Training of bus drivers has been completed. Due to the size of the operation, the project will be implemented in four phases and 55 buses will be delivered over a period of three months.
Next week, all AB 350 bus drivers will receive induction and training on Questec ticket machines. A batch of 12 new buses (65 seaters) will commence the operations on 3 March 2008 in the Mbizana area by servicing 11 routes. Thirteen more buses will be delivered on 18 March 2008 to operate in the Mount Frere Area. On this date, MEC Mhlahlo will officially launch Africa's Best 350 Ltd in Mbizana.
On 11 April 2008, another batch of 16 buses will be delivered to operate in the King Sabata Dalindyebo area. The fourth batch of 16 buses will be delivered to operate in the Matatiele area. A further 56 buses will be distributed later this year and the last 55 with effect from April 2009.